Why not just use the bank?

The matter of fact is that is fairly difficult to get a small business loan from the bank, or to apply for governmental small business loan programme. It’s fairly difficult to get approved by large financial institutions such as banks for the following reasons:

When they assume a business’ risk, they rely heavily on credit scores.

They are looking for securities.

They are bureaucratic, slow, and are not adapt to the small business mentality.

Decision making is slow and thus quick business loans are impossible.

With the so called “new generation” of small business lenders, as we have reviewed and presented on this page, the process becomes must swifter, and the individual risk scores are determined by a multitude of data.

Each company is a tad different in the way these risk scores are being calculated, but the bottom line – they all try to make assumptions, and quote you with the relevant loan term for your risk level (if you pass compliance and approval).

Modus Operandi?

Register with these companies, give your business details, scan the relevant documents they request from you (the more data you provide – the more likely you are to get approved), and get an offer. You can do that in parallel with a few relevant companies, and compare between their quotes.

What next?

View our side-by-side comparison of our top 4 choices for unsecured alternative business lending for this year.

** Cash advances don’t have a fixed interest figure, and no clear repayment schedule, for more information please view here.

As our selection consists of several type of loans i.e. short term loans from lenders, p2p loans from specialised business-oriented companies, as well as advances, we have dedicated an entire section to each.Click on the links below to reach these sections easily.

Worth Mention: Ebury Financial which offers both corporate money exchange and business funding

P2P Business loans:

Peer to peer loans (known as P2PL) are getting increasingly popular in the private sector, especially in the UK, and since the inception of FundingCircle started to catch up in the business sector, with more than 500,000,000 Pounds lent to British businesses (out of this amount – 60M lent by the UK Government).

How does Peer to peer business lending work?

As the name indicates, peer to peer lending platforms connect the two ends of the money equation – one being the lender (individuals or businesses), and one being the loaner (in this case – businesses only).

As a loaner, you are completely transparent to who is borrowing you the money; while as a lender you can either choose specific businesses to lend your money to, or auto-bid (the system will choose for you, and hedge your risk optimally).

P2P Business Lending choice:

FundingCircle – Review

Short, Medium and long term loans available

The minimal time span for a loan is 6 months, and the maximal time is 6 years. Since there are no early repayment fees, if you need the money for less than 6 months, you can still select the “6 months” option.

Loans size: £5,000 – £1,000,000.

Secured and unsecured business loans

FundingCircle offers both secured and unsecured loans. The loan eligibility algorithm is not publicly published, so it is advisable to apply for a loan, even if you think you’re going to be rejected. It doesn’t cost you anything and doesn’t affect your credit score.

Here are details we do know:

Credit score is not the only determining factor for eligibility (unlike banks heavily relying on Experian). FundingCircle maintains its own credit model consisting of things such as director backgrounds, management models. So bad credit business loans are possible within this model, if the risk-management team in FundingCircle thinks the risk is manageable. These credit models are reviewed once a month.

If it’s a limited liability company, or partnership, it will have to be at least 2 year history of accounts filed at Companies House, with min. turnover £50,000.

Loan rates & Fees

If FundingCircle’s risk management team rates your risk level as extremely low (A+), you can get a loan for as low as 6% APR. There are additional fees added, but they are all completely visible upfront, so after applying for a loan, you can make a sober decision on whether it fits you or not. By APR, this is the best unsecured business loan you can get (if you’re a low risk business).

How long does it take to get an approval?

After applying you will get a preliminary reply within 48 hours, as opposed to banks where the process can take a few weeks.

Credibility

10% of loans come from UK government which is a strong indicator for a valid business loan provider.

FCA-approved, registration number 635439.

ReviewCentere rating 4.5/5 (more than 80 reviews).

TrustPilot ranking of 9.5 / 100 (more than 400 reviews).

Won several industry awards such as the MoneyFacts business choice, and CreditToday awards.

Is FundingCircle relevant for UK businesses only?

FundingCircle has been developed for the UK audience, but recently expended in the US. Since our website, MoneyTransferComparison.com, is mainly UK-facing, we didn’t go in-depth in regards to the US version but you can make the inquiries yourself here.

How to apply?

Click here, and fill out the short form. You will be contacted briefly by FundingCircle’s staff.

Short term business lenders:

Online short term business loans are an easy way of funding businesses. The target audience of such loans is usually: startups, SME’s, online retailers and basically any business which requires immediate cash flow with a quick approval.

How does the setup work?

The concept is pretty straight forward. As with P2P loans and cash advances, the decision-making algorithm is company-specific; so the best way to check viability and terms is simply to apply for a loan.

As soon as you fill out the details requested, the platform will send you a response in a matter of minutes. That response would indicate whether your business is eligible for a loan, and under which terms the company is willing to provide such a loan

Short term business loans choice:

EZbob – Review

Up to 15 months

The minimal time span for a loan is 1 month, and the maximal amount is 15. Early repayments pose no penalties, and well encouraged by the EZBob team. You can get your loan deposited directly into your paypal account.

Loans size: £1,000 – £120,000.

Unsecured loans with a personal guarantee

EZBob offers unsecured loans. The only thing required to get a loan (if you meet the requirements) is a personal guarantee.

The minimal requirements are as follows:

The company should be a UK registered company, and the person applying for a loan must be either a director, owner or partner within it (sole traders are also welcomed).

The min. annual turnover must be £10,000.

After confirming the above, you will need to send either your VAT credentials, copies of your last5 VAT returns, your banks statements or your marketplace online credentials (for online sellers).EZbob will use the information you have provided to try and determine whether you could repay the loan you request.

Loan rates & Fees

The minimal APR advertised on EZbob is 18%, while “average” monthly interest is at around 2% (which amounts to about 26% APR).

Though this number can appear scary bear the following in mind:

Unsecured loans carry greater risk for the lender, and thus interest rates are higher per definition. Unsecured personal loans, in comparison, are usually in the XXX or X,XXX % APR range; Next to these figures, the 18-30% range EZbob offers sounds highly attractive.

You pay for the promptness of service as well. Considering the fact EZbob’s service is unique in a sense it is the quickest way to get funds for your business, you can afford yourself to swallow the interest frog.

Many of the borrowers use that money for very short time spans, in which the interest rate is less of a concern.

In reality, if you apply for a loan of 10,000 pounds to pay this month’s salaries and save your business, and then, in 2 months time, pay 10,400 (10,000 principal, plus 400 in interests) – the interest rate appears measly when compared to the value the loan can provide.

There are no hidden fees, unlike other facilities.

There are no penalties for early repayments.

The overheads imposed by banks (requesting strong documentation of the business, business plans, etc.) could be costly and time consuming, which is something a business owner must amount when comparing between the different business funding alternatives.

How long does it take to get an approval?

It takes 10 minutes to registerto the platform, after which you will be provided with your login credentials. When you log in, you will be given your own dashboard, when you can add data about your business (connect it to your Paypal account, Amazon seller account, Shopify account, Safeone account, etc.).

The more data you add, the more EZbob can understand your business beyond the usual metrics like credit history, and approve loans.

How to apply?

Business cash advances:

A business cash advance is provision of immediate cash, in exchange for a portion in future sales. Unlike a loan paid according to predetermined terms, with cash advances it is typical to agree on a percentage of turnover that will be paid until the total amount to repay is cleared.

How does the setup work?

Cash advances are possibly the quickest way with the highest approval rate. You fill out the form, get a call back on the same day, and agree on the terms. You will only need to provide your company’s registration information, credit card history, and a proof you’ve been in business for more than 6 months.

Business cash advance lender choice:

Liberis – Review

1-9 Months

Time span is not one of the pre-agreed terms when taking a business cash advance at Liberis, as the repayment is directly connected to your business’ performance (repayment is in correlation with earnings). Still, it is common that the top cash advance amount that will be approved, is one that you can repay in a matter of up to 9 months.

Loans size: £2,500 – £300,000.

Unsecured loans with just credit card history

Liberis doesn’t require much from you in order to become eligible for a loan, and they advertise the fact 90% of the businesses applying for a cash advance are being approved. What you need to provide is simple:

Proof of ownership or partnership in a UK registered business, running for at least 6 months.

Your credit card history.

That’s about it. If Liberis believes you have a viable business that actually generates sales and is able to repay in a matter of months, you’ll get a very straight-forward offer tailored to your situation. Of course this is unsecured.

Loan rates & Fees

Since this is technically not a loan, there is no APR. There is 3 numbers involved in the Liberis equation – the amount you received, the percentage of sales you will automatically repay the cash advance with, and the total amount to pay back.

When looking at the pricing section over at Liberis.co.uk, you see plenty of different scenarios; different businesses receiving different amounts of cash, for varying periods of time (average is at the 6-8 months period), with varying interest rates (for the average time period it seems like the average is in the mid-teens per cent).

Overall when you compare it to other types of funding, it is indeed a high interest rate but cash advances are very immediate and easy to get approved for, so in essence they are higher-risk, higher-interest loans (which make a lot of sense).

How long does it take to get an approval?

The form is very short and easy to fill out, and the callback is expected within 24 hours. After providing the details, it is possible you will have your cash in hand less than 24 hours since you made first contact with Liberis.

Credibility

Over £75,000,000 provided.

Registered business in England and Wales No. 5654231.

FCA-approved, registration number 647816.

Feefo rating 100%, 32 reviews overall.

No reviews founds at TrustPilot or ReviewCentere.

Patron of the Nation Association of Commerical Finance Brokers.

CreditToday awards finalist.

Overall: definitely seems like a credible business, but our personal preference is to go with one of the other lenders that are FCA-approved.

Is Liberis relevant for UK businesses only?

Yep, UK only.

How to apply?

Applying to Liberis is the simplest of the bunch. Go hereand provide preliminary details about yourself and your business, a Liberis representative will get back to you shortly.

More Funding Options for SME’s

Please note: Late repayments can cause serious trouble, to you, and to your business. We advice you to carefully plan any loans or cash advances, and in particular the ones we review (i.e. unsecured, penalties if you are late on repayments). Don’t take a gamble with unsecured loans for businesses. More information at https://www.moneyadviceservice.org.uk.

Please note (2): We are affiliated with the companies presented in this article, and will get compensation once we introduce them to new clients. With that being said, we believe these companies have VALUE, especially for small businesses, and we created this page as per popular demand.

Please note (3): We have been featuring a company named FundBird on this page. Since the FCA issued a direct warning against it, we have removed it and will never work with it again.

6 comments

Well unsecured financing for businesses is a highly important topic, and you made a good choice focusing on it. There aren’t many specalised guides about this topic in the UK. Some people refer to these fast loan companies as the new PayDay but I don’t think that’s true… some of these companies seem extremely solid, especially Funding Circle. Their min APR is better that what you would probably get from the bank.

Guy P, thank you so much for pointing that out to us! We were in direct contact with the owners of the Fund Bird who said they are under an authorisation process with the FCA. We don’t know what went wrong along the way, and honestly, we don’t care, as it’s our reputation here on the line… we have removed them and will cease working with them even if they do gain a license. If you are have more details please do contact us! Thanks again.

I am from GREECE, and i try to find a business loan 10.000.000,00 euro from a bank or private to start to make a new company bakery-pastry foods.if your company deals with those loans,please sent me a answer. P.S.Also i can sent you the business plan. thank you. thanasis Arvanit

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